Court quashes exhibit P-12, orders refund of Rs. 2,80,512.10 to petitioner.

The court quashed exhibit P-12 dated 16th June 1980 and directed the Assistant Commissioner of Sales Tax, Special Circle, Alleppey, to refund Rs. 2,80,512.10 to the petitioner within four weeks. The original petition was allowed with costs.

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Issues Involved
1. Effect of an appellate order setting aside or canceling an assessment order and remanding the case for fresh consideration.
2. Refundability of tax paid pursuant to a notice of demand pending appeal.
3. Scope and effect of G.O. No. 48/79/TD dated 21st March 1979, regarding the waiver of sales tax collection on inter-State sales of rubber by rubber planters in Kerala prior to 1st June 1978.

Issue-Wise Detailed Analysis

1. Effect of an Appellate Order Setting Aside or Canceling an Assessment Order
The petitioner, a company engaged in rubber production, was assessed under the Central Sales Tax Act for the years 1970-71 to 1974-75. The assessments were challenged, and the Appellate Assistant Commissioner canceled these assessments and remanded the cases for fresh consideration. The court held that "the moment the order of assessment is set aside or canceled in appeal, the amount paid in pursuance of the order (and/or notice of demand) which was set aside or canceled becomes refundable." This principle is consistent with civil law, where an appellate decree supersedes the original decree, making the latter non-existent for enforcement purposes.

2. Refundability of Tax Paid Pursuant to a Notice of Demand Pending Appeal
The petitioner claimed a refund of Rs. 2,80,512.10 paid during the pendency of the appeals. The court noted that there was no statutory provision enabling the assessing authority to withhold the refund due once the assessment orders were canceled. The court cited several precedents, including ITO v. Seghu Buchiah Setty and Purshottam Dayal Varshney v. CIT, to establish that if an assessment order is set aside, the notice of demand becomes ineffective, and the tax paid under such notice becomes refundable. The court held that the amounts paid towards the various demands, pending appeals, have become refundable as there are no valid assessment orders or notices of demand for those years.

3. Scope and Effect of G.O. No. 48/79/TD Dated 21st March 1979
The petitioner argued that as per G.O. No. 48/79/TD, the collection of sales tax on inter-State sales of rubber by rubber planters in Kerala prior to 1st June 1978, was waived. The court reviewed the Government Order, which stated, "the collection of sales tax due under the Central Sales Tax Act, 1956, on the inter-State sale of rubber by rubber planters in Kerala during the period prior to 1st June, 1978, shall be waived." The court found that the refusal to refund the tax based on the Government Order was legally erroneous. The court referenced the decision in Nand Lal and Sons v. Excise and Taxation Commissioner, which held that denying a refund in such circumstances would amount to discrimination. Consequently, the court concluded that the petitioner was entitled to a refund based on the Government Order.

Conclusion
The court quashed exhibit P-12 dated 16th June 1980, and directed the Assistant Commissioner of Sales Tax, Special Circle, Alleppey, to refund Rs. 2,80,512.10 to the petitioner within four weeks. The original petition was allowed with costs.

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